Managing the evolving risk landscape with discipline and technical expertise

Ahead of the Baden-Baden Reinsurance Meeting, we spoke to Hiscox Re & ILS’s Katy Sivyer about the evolving risk landscape, underwriting discipline and technical expertise.

The risk landscape is constantly shifting, with climate change being a major factor behind the surge in insured catastrophe losses. Global insured catastrophe losses exceeded$100bn in 2023 for the fourth year in a row and 2024 is on track to see similarly high losses.

Katy Sivyer, senior underwriter, international at Hiscox Re & ILS, told us: “We are clearly seeing a changing frequency and severity of natural catastrophes globally, but not all territories and perils are seeing the same trends and patterns.”

She emphasised the importance of working closely with research and analytics teams to pinpoint the causes behind these shifts, breaking down climate signals by peril and territory.

In addition to navigating changing climate signals, multiple factors such as exposure change, reporting shifts or inflation – both economic and social – need careful consideration.

Sivyer explained how Hiscox Re & ILS’s deep expertise in analytics and technical underwriting ensures the team takes a nuanced view of the changing risk landscape, avoiding a one-size fits-all approach. “This helps us better support clients in tailoring coverage to adapt to their unique exposure profiles,” she added.

Discipline: the foundation of a sustainable market

After several challenging years, in January 2023 the reinsurance industry saw what Sivyer called “a much-needed correction”, whereby rates and retentions increased, and terms and conditions improved radically. However, Sivyer was quick to caution that "one good year does not make up for the last half decade of underperformance”. Discipline around retention, rates and terms and conditions remains critical for future sustainability.

“There's still a lack of pricing adequacy in certain regions. We need to ensure that as a market we understand and properly price for all the risk – modelled and non-modelled,” she explained.

She also underscored the importance of maintaining a sustainable role for reinsurers – protecting against low-frequency, high-severity capital events, rather than protecting the balance sheet of insurance companies from day-to-day volatility.

Sivyer highlighted the importance of working closely with clients, adding: “We want to protect them when the worst happens, and that means building long-term relationships and tailoring coverage to reflect each partner’s unique risk.”

Hiscox Re & ILS: a leader in advanced technical expertise

Data and analytics are among the core principles of Hiscox’s vision and strategy. In December 2023, Hiscox announced a partnership with Google to explore the applications of AI technology to augment its underwriting teams’ knowledge and expertise.

In terms of Hiscox Re & ILS, Sivyer emphasised: “We’re exploring what we can do. Our focus is on using cutting-edge technology to refine data analysis, unpick trends and integrate the latest science into our view of risk.”

This data-driven approach allows Hiscox to help clients make better-informed decisions by providing access to insights.

Sivyer is optimistic about how meaningful AI and technological advancements could be.

“Twenty years ago, catastrophe models were just starting out, but they have revolutionised portfolio management and our management of risk. With AI and data augmentation we can explore new territories and create more relevant products for our partners. It is a really exciting time to be in this space,” she said.

In a world where risk is constantly evolving, Hiscox Re & ILS wants to stand out as a leader combining discipline, technical expertise and long-term partnership to help clients navigate future challenges.